Former Federal Labor MP Craig Thomson is accused of using a Health Services Union credit card to pay for prostitutes. Photo: Penny Stephens

Mr Thomson has admitted to using union funds to pay for fuel and travel expenses but he has insisted in Parliament that he had been set up over the payments to brothels and escort services in Sydney and Melbourne during his time at the helm of the Health Services Union.

The MP's lawyer, Greg James, QC, told the Melbourne Magistrates Court the defence would not dispute many facts presented by the prosecution.

''There's not much by way of factual dispute at the moment,'' he told the court on Friday.

Mr Thomson told Fairfax Media after the hearing that he did dispute reports suggesting he had conceded making the payments for prostitutes by indicating there would be little debate over the facts.

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''We're not conceding anything,'' he said.

''I am not making any admissions. But there is a threshold issue of who had authority to use the credit card, which must be heard first.

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''If the Crown cannot prove its case on this issue, all other charges become null and void.''

Crown prosecutor Kieran Gilligan told the court that the matter was too big and complex to be heard before a magistrate.

He said the fact that the offences represented a breach of trust aggravated the charges, which he agreed could technically fall into the jurisdiction of a magistrates court.

''The accused was the national secretary of a national union in a position of trust and subsequently a member of Parliament,'' Mr Gilligan said.

Magistrate Charlie Rozencwajg dismissed the argument for the case to be heard in a higher court before a judge and jury.

Mr Rozencwajg said the alleged fraud charges totalled $28,000, which was well within the jurisdiction of the magistrates court.

He said that even if Mr Thomson was convicted of all charges he would face less than five years in jail, a sentence well within the jurisdiction of the court.

''I do not regard this case as complex,'' he said. ''In my view, this court is more than capable of dealing with this matter.''

Mr Thomson's bail was extended for another mention hearing on August 16.

Mr Thomson worked as national secretary of the Health Services Union between August 2002 and December 2007 before he was elected to Parliament as a Labor MP.

It is alleged Mr Thomson used the two cards - a Mastercard and a Diners Club card - for personal use.

His alleged expenses included female escort services, X-rated movies at hotels, airfares and cigarettes for his spouse and firewood for his home as well as food and accommodation not related to union business.

It is also alleged that Mr Thomson continued to buy personal items on the cards after being elected to Parliament.